AMD will today announce price cuts on its K6 range of processors to match those made by Intel today and exclusively revealed by 'VNU Newswire' last week.
But the Intel price cuts vary, according to customers, with the chip giant offering large tier one vendors far better prices than its smaller customers, according to a source.
Prices for the AMD K6 233MHz drop from $225 to $148, while the K6 200MHz part drops in price from $160 to $95. Those prices are for units of 1,000 and confirm AMD?s pledge to keep prices at around 30 per cent below the Intel parts.
Fellow Intel cloner Cyrix had already dropped its prices on 7 January, said Brendan Sherry, general manager of the company in Europe. Prices on the Cyrix 6X86 166MHz fell from $100 to $72, the 200MHz part from $121 to $90 and the 233MHz from $250 to $130.
Sherry said of the Cyrix prices: ?Our only significant change in pricing is at the 233MHz level, we?re in volume production with that part.?
According to the source close to Intel?s plans, the giant cut its prices so fiercely because tier one manufacturers had told it to be competitive with the Socket Seven alternatives.
He said: ?Tier one manufacturer volumes are still at the Pentium MMX level. They?ve picked off people like Packard Bell and offered their 200MHz MMX part at as low as $75.?
He claimed Intel was being selective in its pricing. ?It?s pretty clear that the big players are getting special prices from Intel but there?s still a lot of discussion in the tier one players about whether this is a good thing or not.
This is because low chip margins could affect future investment by the chip majors. ?Chip manufacturers have to find ways of making money and they?re going to have to do that by cutting their own costs and their costs on the channel," explained the source.
He added: ?You won?t see Pentium II processors at a knock down price for some time because there are still mountains of stock. Intel could give away at $70 and still make a profit but at those prices they couldn?t finance future fabrication plants.?
Joe D?Elia, senior semiconductor analyst at Dataquest UK, said: ?Intel wants to accelerate the disappearance of Socket Seven from the desktop so they are pricing the Pentium II accordingly. The bulk device in the short term will be more the PII/233MHz part than anything else and we saw them price that accordingly at the end of December.?
He said Intel was aiming for the Pentium II to be the mainstream device it sold in the first and second quarters of this year.
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